MorphoSys AG Reports Nine Months 2012 Results

MARTINSRIED, GERMANY and MUNICH, GERMANY--(Marketwire - November 07, 2012) - MorphoSys AG / MorphoSys AG Reports Nine Months 2012 Results . Processed and transmitted by Thomson Reuters ONE. The issuer is solely responsible for the content of this announcement.

MorphoSys AG (FSE: MOR; Prime Standard Segment; TecDAX) today announced its financial results according to International Financial Reporting Standards (IFRS) for the nine months ending September 30, 2012. The most important event during the third quarter was the publication of excellent safety and efficacy data for MOR103 in rheumatoid arthritis (RA), the most advanced proprietary program in MorphoSys’s pipeline.

“During the first nine months of 2012, we made significant progress with our pipeline of new therapeutic products, which is the most important value driver for the Company”, stated Dr. Simon Moroney, Chief Executive Officer of MorphoSys AG. “The positive outcome of the MOR103 study and the progress of our partnered pipeline underscore the strength of our business model. We look forward to further progress in the months and years ahead.”

Highlights of the Third Quarter

* MorphoSys delivered positive safety and efficacy results from a phase 1b/2a study of MOR103 in rheumatoid arthritis patients.

* MorphoSys and the University of Melbourne published preclinical data on the role of GM-CSF in inflammatory, arthritic and osteoarthritic pain.

* Roche highlighted progress in developing the HuCAL antibody gantenerumab in Alzheimer’s disease at its Investor R&D Day.

* MorphoSys’s partner OncoMed initiated a phase 1b/2 clinical trial with HuCAL antibody OMP-59R5 in advanced pancreatic cancer.

* MorphoSys’s partner Bayer HealthCare received Orphan Drug Designation for the HuCAL-based antibody conjugate BAY 94-9343 in the USA for the treatment of mesothelioma.

* The product portfolio at MorphoSys matured further and remains one of the industry’s broadest antibody pipelines: at the end of the quarter, MorphoSys’s partnered and proprietary pipeline comprised 76 programs, of which 21 are in clinical development.

| |Nine Months |Nine Months | | | | |Ended |Ended | | | |In EURO million |Sep 30, 2012|Sep 30, 2011|Q3 2012|Q3 2011| +-------------------------------+------------+------------+-------+-------+ | | | | | | +-------------------------------+------------+------------+-------+-------+ | | | | | | | | | | | | |Group Revenues | 48.9| 83.7| 15.9| 17.1| +-------------------------------+------------+------------+-------+-------+ |of which success-based payments| 1.9| 32.2| 0.0| 1.0| +-------------------------------+------------+------------+-------+-------+ |of which AbD Serotec | 13.7| 14.1| 4.9| 4.7| +-------------------------------+------------+------------+-------+-------+ |Total Operating Expenses | 51.3| 64.1| 16.3| 20.6| +-------------------------------+------------+------------+-------+-------+ |EBIT | (2.3)| 18.0| (0.4)| (3.4)| +-------------------------------+------------+------------+-------+-------+ |Net Profit/(Loss) | (1.2)| 13.0| (0.2)| (2.0)| +-------------------------------+------------+------------+-------+-------+ |EPS, diluted, in EURO | (0.05)| 0.56| (0.01)| (0.09)| +-------------------------------+------------+------------+-------+-------+ | | | | | | 

“Our financial strength allows us to continue investing in proprietary R&D, the main value driver of MorphoSys,” commented Jens Holstein, Chief Financial Officer of MorphoSys AG. “Our financial results are, however, increasingly dependent on milestone payments and the initiation of additional commercial agreements, leading to a higher volatility in revenues and earnings. Negotiations for additional commercial agreements took longer than originally anticipated and as a consequence are having a negative impact on our financial results for 2012.”

Financial Review for First Nine Months of 2012 According to IFRS

Group revenues for the first nine months of 2012 were EUR 48.9 million (9-months 2011: EUR 83.7 million), the difference to the previous year largely reflecting a one-off payment received in Q1 2011 from Novartis for the successful installation of the HuCAL platform at the Novartis Institutes for BioMedical Research in Basel, Switzerland. Revenues in the Partnered Discovery segment comprised EUR 32.1 million in funded research and licensing fees (9-months 2011: EUR 35.7 million) and EUR 1.9 million in success-based payments (9-months 2011: EUR 32.2 million). The Proprietary Development segment recorded funded research revenues of EUR 1.2 million (9-months 2011: EUR 1.9 million). Assuming constant foreign exchange rates at the average rate of the first nine months of 2011, revenues in the Partnered Discovery and Proprietary Development segments would have remained almost unchanged at EUR 35.1 million. The AbD Serotec segment provided 28 % or EUR 13.7 million of total revenues (9-months 2011: EUR 14.1 million), a decrease of 3 %. Assuming constant foreign exchange rates at the average rate of the first nine months of 2011, revenues in the AbD Serotec segment would have amounted to EUR 12.9 million.

Total operating expenses for the first nine months of 2012 decreased by 20 % to EUR 51.3 million (9-months 2011: EUR 64.1 million). The decrease of EUR 12.8 million was mainly caused by reduced proprietary research and development (R&D) expenses in line with the Company’s plans. Cost of goods sold (COGS), a line item specific to AbD Serotec, decreased by 13 % to EUR 4.8 million (9-months 2011: EUR 5.5 million). Total research and development expenses for the Group decreased by EUR 11.6 million to EUR 30.3 million (9-months 2011: EUR 41.9 million). The decrease in R&D expenses mainly resulted from a lower level of investment in proprietary product and technology development amounting to EUR 17.2 million (9-months 2011: EUR 26.1 million). Sales, general and administrative expenses decreased by 4 % to EUR 16.2 million (9-months 2011: EUR 16.8 million). Non-cash charges related to stock-based compensation are embedded in COGS, S,G&A and R&D expenses and amounted to EUR 1.0 million (9-months 2011: EUR 1.1 million).

For the first nine months of 2012, MorphoSys recorded earnings before interest and taxes (EBIT) of minus EUR 2.3 million (9-months 2011: EBIT of EUR 18.0 million). Partnered Discovery showed a segment EBIT of EUR 17.9 million (9-months 2011: EBIT of EUR 50.9 million) while the continued investment in proprietary development led to segment EBIT of minus EUR 13.1 million (9-months 2011: EBIT of minus EUR 22.9 million). The AbD Serotec segment recorded a gross profit margin of 65 %, in comparison to 61 % in the first nine months of 2011. The EBIT for AbD Serotec amounted to minus EUR 0.04 million (9-months 2011: EBIT of EUR 0.3 million).

For the first nine months of 2012, MorphoSys recorded a net loss after taxes of EUR 1.2 million compared to a net profit of EUR 13.0 million in the same period of the previous year, the difference again being predominantly due to the one-off payment received in Q1 2011. The resulting diluted net loss per share for the first nine months of 2012 was EUR 0.05 (9-months 2011: diluted net profit of EUR 0.56).

On September 30, 2012, MorphoSys’s cash, securities and interest-bearing assignable loans amounted to EUR 137.5 million (December 31, 2011: EUR 134.4 million). Net cash inflow from operations in the first nine months of 2012 amounted to EUR 2.4 million (2011: net cash inflow EUR 36.1 million). The number of issued shares at September 30, 2012 was 23,308,622, compared to 23,112,167 shares at December 31, 2011.

Financial Review of the Third Quarter of 2012 (IFRS)

In the third quarter of 2012, revenues were EUR 15.9 million, compared to EUR 17.1 million in the same quarter of 2011. Earnings before interest and taxes amounted to minus EUR 0.4 million, compared to an EBIT of minus EUR 3.4 million in the same period of 2011. A net loss of EUR 0.2 million was achieved in the third quarter of 2012, compared to a net loss of EUR 2.0 million during the same period in 2011.

Outlook for 2012

As stated in the past, revenues in 2012 are increasingly dependent on success-based milestones in existing therapeutic antibody programs, new alliances or the expansion of existing alliances involving new technology platforms such as Slonomics and Ylanthia. In 2012, negotiations for additional commercial agreements took longer than originally anticipated. In addition, the uncertainties of government fiscal deficits led to a reduction of funding for the research market, leading to lower sales in the AbD Serotec unit.

Therefore, MorphoSys updates its financial guidance for the Group for 2012. The company expects Group revenues to be in the range of EUR 70-75 million, thus being slightly below the original guidance of EUR 75-80 million. In terms of EBIT for the Group, it is expected to be around the lower end of the original guidance of EUR 1-5 million. At the time of the publication of the 9-months 2012 report, certain income-generating events are expected to materialize before the end of the year, the timely conclusion of which is important for reaching the 2012 financial guidance.

This guidance currently does not include a successful out-licensing of any of the Company’s proprietary development programs. The scope and the timing of such events is difficult to predict and therefore not included in the financial projections.

Investment in proprietary research and development in 2012 remains unchanged and will be approximately EUR 20-25 million.

MorphoSys will hold a public conference call and webcast today at 02:00 p.m. CET (08:00 a.m. EST, 01:00 p.m. GMT) to present the Second Quarter Results 2012 and report on current developments.

Dial-in number for the Conference Call (listen-only): Germany: +49 89 2444 32975 For U.K. residents: +44 20 3003 2666 For U.S. residents: +1 202 204 1514 

Please dial in 10 minutes before the beginning of the conference.

In addition, MorphoSys offers participants the opportunity to follow the presentation through a simultaneous slide presentation online at http://www.morphosys.com.

A live webcast, slides, webcast replay and transcript will be made available at http://www.morphosys.com.

Approximately two hours after the press conference, a slide-synchronized audio replay of the conference will be available on http://www.morphosys.com.

The complete 3(rd) Interim Report 2012 (January - September) is available on our website (HTML and PDF): http://www.morphosys.com/FinancialReports

About MorphoSys:

MorphoSys developed HuCAL, the most successful antibody library technology in the pharmaceutical industry. By successfully applying this and other patented technologies, MorphoSys has become a leader in the field of therapeutic antibodies, one of the fastest-growing drug classes in human healthcare. The company’s AbD Serotec unit uses HuCAL and other antibody technologies to generate superior monoclonal antibodies for research and diagnostic applications. Together with its pharmaceutical partners, MorphoSys has built a therapeutic pipeline of more than 70 human antibody drug candidates for the treatment of cancer, rheumatoid arthritis, and Alzheimer’s disease, to name just a few. With its ongoing commitment to new antibody technology and drug development, MorphoSys is focused on making the healthcare products of tomorrow. MorphoSys is listed on the Frankfurt Stock Exchange under the symbol MOR. For regular updates about MorphoSys, visit http://www.morphosys.com

HuCAL®, HuCAL GOLD®, HuCAL PLATINUM®, CysDisplay®, RapMAT®, arYla® and Ylanthia® and 100 billion high potentials® are registered trademarks of MorphoSys AG

Slonomics® is a registered trademark of Sloning BioTechnology GmbH, a subsidiary of MorphoSys AG.

This communication contains certain forward-looking statements concerning the MorphoSys group of companies. The forward-looking statements contained herein represent the judgment of MorphoSys as of the date of this release and involve risks and uncertainties. Should actual conditions differ from the Company’s assumptions, actual results and actions may differ from those anticipated. MorphoSys does not intend to update any of these forward-looking statements as far as the wording of the relevant press release is concerned.

3rd Interim Report 2012 (PDF): http://hugin.info/130295/R/1655606/535015.pdf

Media Release (PDF): http://hugin.info/130295/R/1655606/535014.pdf

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Source: MorphoSys AG via Thomson Reuters ONE

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